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IMF On Verge Of Boosting Chinese Role
Singapore (AFP) Sep 17, 2006 International Monetary Fund policymakers were poised Sunday to back a major overhaul giving China a louder voice in IMF decision-making and providing the 61-year-old body a more muscular role as economic mediator. South Korea, Mexico and Turkey would also benefit from a reform initiative that would enhance their clout in Fund deliberations, a step IMF directors insist is necessary if the institution is to remain relevant. IMF directors and Group of Seven industrialized countries have backed the proposal, which on Sunday was being discussed by the Fund's 24-member, policy-setting International Monetary and Financial Committee. The full 184-strong membership of the IMF has until Monday to officially approve the measure, which according to sources here already has the necessary backing. An announcement of the results is expected on Tuesday. During the 1990s the IMF was in the vanguard of efforts to resuscitate economies from Latin America to Asia, throwing out multibillion-dollar lifelines. But recently it has had no major crisis to manage and with its lending on the decline the Fund's own finances are running in the red. Asian nations, backed by Japan, as well as developing countries have long been pushing for a greater say at the institution, which during its six-decade life so far has been dominated by the United States, Europe and Japan. The four countries to benefit from the changes under consideration here are said by the IMF to be the only members under-represented on all four of the criteria that determine a country's voting rights. Those criteria are the member's gross domestic product (GDP), its openness to trade, the "variability" of its economy, in other words how volatile its growth is, and the amount of its reserves. China would see its share of total IMF voting rights raised to 3.65 percent from 2.94 percent now while South Korea's share would increase to 1.33 percent from 0.76. Mexico would go to 1.43 percent from 1.20, with Turkey's participation climbing to 0.55 percent from 0.45. Beyond the modifications expected in Singapore, IMF directors have agreed on a two-year reform program of reform to be completed "no later" than the Fund's annual meeting in September 2008. After the Singapore gathering, the next step will be to agree on a new formula to calculate the dollar quotas that each IMF member contributes to the Fund and which determine its voting rights. But within the membership there has been some disagreement on the reforms, with certain European and developing nations voicing dissatisfaction. "We hope to stick with the system we have now," Dutch Finance Minister Gerrit Zalm said earlier this month, adding that the current arrangements were "far better than having big blocs standing against each other in the IMF". Developing country finance ministers, who met here Saturday, said the proposed initiative does not go far enough in according low-income members more influence. In addition four IMF members -- Argentina, Brazil, India and Egypt -- on Saturday expressed opposition to the overall reform drive and called for its suspension until "a simple and transparent formula" is worked out that is "truly reflective of the economic standing" of member countries. The Fund is also seeking to enhance its role in financial surveillance by shifting from a focus on individual countries to multilateral consultations, notably when the policies of one country "spill over" and affect the interests of others. The proposal has been supported by the United States, which would like to see more forceful IMF action on the Chinese exchange rate regime, which according to Washington gives Chinese goods an unfair advantage on export markets. But analysts note that with no fangs to bare, the IMF may struggle to find a role as an effective economic watchdog. "Will the IMF be successful in brokering a deal?" asked Harvard professor and former IMF chief economist Kenneth Rogoff, referring to the Fund's efforts to coax its largest members to help diffuse massive trade imbalances. "The recent catastrophic collapse of global trade talks is not an encouraging harbinger," he wrote in an opinion piece.
Source: Agence France-Presse Community Email This Article Comment On This Article Related Links The Economy The Economy
G7 To Criticize China Over Costly Loans To Poor Nations
Beijing (AFP) Sep 15, 2006The Group of Seven nations will use a meeting this weekend in Singapore to criticize China for extending high-priced loans to poor countries in Africa and elsewhere, the Wall Street Journal said Friday. The G7 is expected to issue a statement that, among other things, will take China to task for promoting exports to poorer nations via expensive trade financing, the newspaper said, citing US Treasury Undersecretary Timothy Adams. |
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